Doing Business in China

The reasons for doing business in China are manifold and obvious. First, consumer wealth is expanding in China and the last figure I heard was that there were approximately 500 million people in the middle class in China. That number is ever expanding and the middle class are eager for goods and services from the West.

Second, China is an emerging superpower. It may even eclipse the United States as the preeminent economic super power in the world. That means more money and disposable income for China and the Chinese people.

Third, according to countrymeters.info/en/china, China’s population as of December 29 2017 has reached a staggering 1,394,043,374. That’s a lot of consumers and potential customers!

Fourth, China offers significantly lower wages than North America. One source states that the average Chinese factory worker makes $27.50 per day. Another source suggested that the average monthly income of a Chinese worker in 2016 was $922.64. That can mean big savings for a North American company willing to relocate on the Chinese mainland.

But, not everything is positive. Just as in the movie extra’s motto of “hurry up and wait” the same holds true when setting up a business in China. There can be significant delays of months and up to years for any foreign company wanting to set up business in China. Don’t be in a hurry.

Intellectual property rights and copyrights are often violated or even ignored outright! Resolving legal issues in China may range from very difficult, to downright impossible! Trying to resolve any legal issue in China may prove to be a complete waste of both your time and money!

Anyone setting up business in China must comply with all governmental wishes and expectations. There may be legal fees and other additional costs as well.

As for unexpected expenses, land in China is not sold, only leased. Any company setting up a factory in China for instance, might have to lease the land before the factory is built. What’s even worse, the company may be expected to build the road leading to the factory, at their own expense! The cost of electricity can be unexpectedly expensive as well.

To any company or business wishing to set up shop in China, I offer a few words of caution. Do your due diligence. Know what you are getting into before you make the move. If after making a careful, thorough study, you believe that you will still make a decent profit, then I wish you all the best in your enterprising endeavour! 

Sincerely,

Nicholas Chase